Monday, December 31, 2012

The most influential
book I have ever read, which first alerted me to the incredible complexities of
global criminal financing is called 'Hot Money and the Politics of Debt'. It
was published in 1987, written by a Canadian professor of economics called R.'Tom'
Naylor. It is a textbook on global economics, but it reads like a thriller. It
fascinated and appalled me in equal measure, and no book I have ever read,
before or since, has influenced and informed me as much as this book has done.
I re-read it periodically to renew my faith in the legitimacy of my views, and
I owe Tom, who is now a good friend, a great debt of gratitude for sharing his
insights with me.

It was Tom Naylor
who first alerted me to the existence of the vast ball of hot and homeless
money which roams around the world looking for a temporary home before moving
on to find another refuge which offers a better rate or a better political
climate; and how the world '...of high finance, governmental and corporate,
became hostage to its existence, and the price the rest of the world will
continue to have to pay until those hostages can be released from its vice-like
grip...'

"...Since the
late 1970s, the world has also seen a dramatic rise in the organisational
skills of white-collar criminals - specifically their ability to control
illegal markets, to render the operation of legal markets illegal and to
debauch the political systems that are supposed to keep their power in check.
The financial counterpart of the growing power and scope of white-collar crime
is the increasing use of the instruments of peekaboo finance and a parallel
expansion of its machinery..."

The financial crisis
which has caused such damage to the economies of a wide group of Western economies,
arose directly from the criminal activities of banks who had long since stopped
seeking to provide conventional banking services to their customers, and who,
through the use of Naylor's peekaboo financing, were looking instead for ways
in which to continue to manipulate the world's sources of capital flows, with
the view of enhancing their own profitability.

The world's major
banks have ceased to have any conventional function as the providers of banking
services to ordinary men and women. They are now profit centres in their own
right, generating profits to satisfy the exponentially-growing demands of their
shareholders, who have come to rely on the dividends paid to them by their
bankers in return for maintaining their shareholdings.

These banks have no
'normal' social purpose at all, in fact, if they could get rid of small clients
like you and me, from whom they make no money if we stay in credit (which is
why they underwrite the student loan system because it guarantees a generation
of young people permanently indebted to them), they would jettison us tomorrow.

They have been
trying to marginalise small retail clients for years, because we are no use to
them. They exist to create value through debt which they then sell to each
other and some clients in the form of securitised investment possibilities,
relying on the 'greater fool' theory to ensure they don't end up with the toxic
parcel at the end.

Their real role is
to facilitate the safe handling and onward transmission of Naylor's vast ball of hot, criminal money which rolls
around the financial world, seeking temporary accommodation.

They each take it
in turn to earn a profit from their actions before helping the money to move on
again to the next facilitator. That's what the major financial institutions in
the UK exist to do and have done for many years, and vast fortunes have been
built on this facilitation of such criminal activity. These banks (now on a
global basis) exist to facilitate the ambitions of international organised
crime, because they have the available capital which needs storing, housing, a
safe haven, and onward transmission in a disguised form. These institutions are
merely an extension of the criminal facilitation process, because the money
which they seek to manage and attract is no longer the proceeds and profits of
ordinary commercial businesses, but the proceeds of white-collar criminals,
organised crime gangs, drug traffickers, and foreign dictators.

They are an integral
part of the criminal money flow function, and they rely on their relationships with the major banks to be
allowed to 'wet their beak' in the pool of money which the major banks are
handling.

The modern problem
for the global financial sector is that the world's major banks now exist for
the purpose of supporting the financial interests of a relatively limited
number of major shareholders, Insurers, pension funds, other banks, (lots of
other banks), investment funds and trusts etc. These institutions exist, like
them, to handle and facilitate the through-put of the staggering volume of
criminal and dirty money which daily flows through the financial sector,
because the profits there from are just so incredibly valuable.

The biggest problem
for these banks is that by far the greatest amount of this money is illegal to
handle under international money laundering laws. All banking institutions are
now effectively subject to international laws which prohibit the handling or
the facilitation of criminally-acquired money from whatever source, and that
money includes the proceeds of drug trafficking, all other criminal activities
(including tax evasion), and the proceeds of terrorism. Added to that are the
criminal proceeds generated through the various exercises associated with
sanctions busting, so when taken as a whole, there is a vast reservoir of black
money which is legally denied to them, but which they desire very much indeed.

The answer for them
is how to find ways of handling that criminal money without being too easily
identified and interdicted. Money laundering methods have become ever more
sophisticated as the financial institutions have sought for ever more sophisticated
ways of handling the money without getting caught too often.

One of the ways in
which they send this message is to persuade their home Governments and
financial regulators that they are financial geniuses, who alone know how to
continue to maintain the throughput of capital upon which so much of the
well-being of the contemporary economy depends.

This is a particularly
subtle but cynical method for protecting their hegemony. They spread the
message that those who are employed within the banking sector are financial
geniuses without whom, the whole edifice would fail to function profitably.
They reinforce this message by paying their staffs salaries and bonuses which
outweigh anything normally dreamt of within the conventional meaning of the
realms of avarice, they engage in wholesale and widespread tax-planning and aggressive
fiscal avoidance schemes, and they encourage wholesale acts of internal
criminal fraud against their retail clients.

This exercise in wholesale
client gouging is predicated by a number of stimuli. First, retail clients are
considered to be fair game for being ripped off, because it is so easy, and can
generate such huge profits.

A recent meeting with
a former HSBC employee confirmed to me the ease with which PPI fraud was
perpetrated against the client base of the bank he worked in. He described how,
as a young bank employee he was routinely required to meet financial sales
targets of such vast proportions that the only way to achieve the monthly
numbers was to engage in PPI fraudulent sales in volumes which caused him to be
physically sick through shame at the end of a day's work.

He described how the
monthly targets were regularly increased as each financial target was achieved,
and how sales managers would regularly visit branches distributing new
'objection' sheets which he and his colleagues had to use to overcome client's sales
resistance. He described knowing that these sales were completely fraudulent,
and that none of the clients would ever be able to exercise the policies if
they needed to use them at any stage in the future.

The outcome of this
massive generation of criminal proceeds, estimated at about a figure of £40
billion, nationwide, was used by the banks as a means of co-mingling with large
sums of dirty and criminal money from illegal sources, but which enabled the
profits to be disguised.

The actions of
creating these fantasy finances were facilitated in no small way by the
criminally-complicit actions of the major firms of Chartered Accountants who
were routinely used to draw up and audit the annual returns. When coupled with the emergence of off-balance-sheet
accounting methods, offshore companies being used to shelter vast sums of cash
and other instruments, much of which were disguised by complex derivative
contracts; and the development of debt treatments which enabled profits to be
minimised for accounting purposes, and within a few years, the bank balance
sheets bore about as much resemblance to reality as puss in boots!

Once these
facilities were all in place, money laundering laws were routinely flouted, while
in-house MLROs were treated like mushrooms and expected to behave accordingly. Within
a very short space of time, banks had not only become too big to fail, they had
become too big to jail.

The money they were moving was so huge and Governments
so scared and gullible that the banks would indeed relocate to other
jurisdictions, as the majors would routinely threaten if public criticism
became too vociferous, that it became very easy to persuade Governments to turn
a blind eye, while regulators were encouraged to look the other way, when the
banks began engaging in a series of wholesale criminal activities.

The risk of going to
jail for managing the enormous sums from the illicit drug trade is small, when
governments are beholding for their contrived power to the banking cabals which
control the apparatus of fiat money.

It took the US
authorities to uncover these criminals and place them before the court of world
opinion. The British did nothing until the Americans took issue with them.

If there was any
lingering doubt about the supremacy of the internationalist banker over the
canons of law, the latest HSBC exemption from criminal charges proves
that the real masters of the planet are the criminal banksters. If this
settlement was an abnormality and not the rule, one might argue the expediency
for pragmatism, while deployable, is necessary. Unfortunately, for the
financial elites, the facts tell a very different story.

“...In court papers
filed in federal court in Brooklyn, the federal government said the case
against HSBC is related to the laundering of proceeds from narcotics
trafficking via the Black Market Peso Exchange, a method by which money launderers
convert cash narcotics dollars into Colombian pesos by buying and re-selling
wholesale consumer goods. “The lack of an effective anti-money laundering program
at HSBC Mexico and HSBC Bank USA, N.A. contributed to the conduct charged” in
the money-laundering case against narcotics traffickers, Justice
Department prosecutors said in court papers.”

“A year-long
investigation by a Senate committee uncovered that HSBC acted as a conduit for
drug money, disguised the sources of funds to evade U.S. sanctions against
Iran, and included among its clients businesses with alleged ties to terrorism.
HSBC’s internal culture has been “pervasively polluted for a long time,” said
Carl Levin, a senator from Michigan, who helped lead the investigation.”

In the seminal study
by John Hoefle coming out of the Executive Intelligence Research,HSBC: Flagship
Bank of Britain's Dope, Inc, the historic composition of dishonest business
dealings that transcend even shady banking is documented.

“It should come as
no surprise that British banking giant HSBC was caught laundering money for
drug cartels and terrorist groups. HSBC, as we shall show, is the kingpin bank
of the global drug trade, a bank which, since its founding in 1865, has been
devoted to financing drug crops and laundering the proceeds. HSBC is,
in fact, one of the key controlling institutions of the global illicit drug
cartel we call Dope, Inc.

If you think that is
an outlandish claim, consider the fact that Executive Intelligence Review,
through its book Dope, Inc., and in its affiliated War on Drugs magazine,
published in the early 1980s by the National Anti-Drug Coalition, have made
this charge for over 30 years, and have never been sued or challenged by the
bank.”

So, what is the
proposal for banks like HSBC and others who engage in criminal enterprises?

Thanks mostly to its
thriving dope business, HSBC has become one the biggest banks in the world.
Among its leading acquisitions internationally, it took over the Mercantile
Bank of India, London, and China, and the British Bank of the Middle East in
1959; and in 1992, it completed a slow takeover of England’s Midland Bank. In
1981, it made a bid for the flagship of the Inter-Alpha Group, the Royal Bank
of Scotland, which was blocked by the British Monopolies and Mergers Commission.

In 1997, it made a
major expansion into Ibero - America, buying parts or all of banks in Mexico,
Argentina, Peru, and Chile, and founding a new bank in Brazil.

From the Far East to
the Middle East to Ibero-America, everywhere the drug trade is flourishing, you
will find HSBC. It may not handle the dope, but it does handle the money,
making sure that the “citizens above suspicion” who run Dope, Inc. from places such
as the City of London get their cut of the proceeds.

Now HSBC has been
caught red-handed laundering money in the U.S. It’s time we set an example and revoke
its charter to do business here. This is a bank which has abused us, assaulted
our people, and violated the law with abandon. Revoke its charter and shut it down.
Now..."

I have tried to show
just how little these institutions really do to help and provide support for
the struggling British economy. They truly are major criminal enterprises and
they don't give a damn for their country of operation. They operate solely on a
zero-sum game, they will go to where the regulation is least and the profits
can be maximised to the greatest potential. That is why they will never leave
the UK.

These banks perform
no useful social purpose, and they deserve no sympathy or support. They exist only
to facilitate an international cadre of global white collar criminals and drug
traffickers. They have no interest in their retail customers who they routinely
despise, how else can you explain the level of institutionalised fraud they
have perpetrated against them and their interests; they don't want to fund business, or
underwrite social investment, you only have to consider the current minimalist level
of funding being provided to businesses which are starved of investment capital
to see the truth of this assertion, yet they expect the British tax-payer to
bail them out when they are failing; they don't want to pay tax, consider their
aggressive tax avoidance structures which they routinely seek to foist on the
Revenue, they don't want to contribute
in any way to the restructuring of the mess they have caused and in which they
have dumped the British people, and frankly, we would hardly notice their
passing if we took them down, one by one, and broke up their empires.

Yes it would mean a
lot of unemployment for bankers, but who is going to shed one tear for these
useless, worthless parasites who contribute nothing to the common weal? Let
them taste a period of unemployment or redundancy for a few years and see if
and how they manage to survive. The immediate net effect would be to begin to
bring down housing prices in London and the South East of England, and begin to
start to re-balance the current disparity in earnings and wages between people
who perform useful social functions and those wanker-bankers who add nothing to
society except to force commodity prices upwards through the power of their ludicrous
bonuses and their inflated salaries.

Sunday, December 30, 2012

Hector Sants, who was in charge of regulation
at the start of the credit crisis, has been knighted. It is in recognition for
services to financial regulation.

In granting Sants this honour, George Osborne
and David Cameron have finally proved beyond any question that they simply
don't understand the terrible damage that the financial sector and the banks in
particular, have caused to the financial interests of the ordinary people of
these islands.

They cannot seem to make the connection between
the dreadful financial damage wrought by the banks on the British economy, and
the real suffering this damage has caused to the ordinary men and women of
Britain who are watching their livelihoods, their futures, their children's
livelihoods and their children's futures being undermined and whittled away by
this constant program of austerity, and the repeated refusal to make the
financial sector come into line with the real world.

This is the real issue and the true outcome of
the financial crisis, where ordinary people's livelihoods are being sacrificed
for the continued interests of Britain's ruling elites. The blame for this can
be laid firmly at the feet of the British banking sector, who through their arrogance,
ignorance and greed * created money they could not underwrite, sold debt and
called it investment, and then fixed the tables on which these gambles were
taking place so that they always won.

The reason for the cause of this dreadful
cancer in the body financial can be laid firmly at the door of a bunch of
bumbling amateurish incompetents in the Canary Wharf Palace of Varieties, known
more widely as the Financial Services Authority, who have consistently failed
to regulate and curtail the activities of the criminal banks. They have the
powers to do so, but they do not have the will, and in many cases the
competence to achieve their statutory requirements. And the underlying cause of
this sheer incompetence lies, and has to lie at the very top of the
organisation, in the office of the Chief Executive.

After all, he was the man who, when describing
the origins of the financial crisis, laid the blame at the door of the US and
UK governments for their part in the crisis, saying authorities worldwide
sought to "encourage a significant credit boom particularly for the
benefit of consumers who wished to purchase housing". This would be to
completely ignore the role of the financial regulators in ensuring that the
banking activities under their watch were not allowed to get out of hand.

Hector Sants has been Chief Executive of the
Fantastically Supine Apologists since 2007, although he had already been a
Managing Director of an FSA Division since 2004.

As such he was well placed to know what was
happening in the markets and to hear the various rumblings in the undergrowth.
He had previously been a successful investment banker with UBS and later Credit Suisse, so he was obviously a
man with significant financial and market experience.

Yet, he was sufficiently unaware of a major
crisis building in the market when he took the job as head of the FSA, two
months before the collapse of Northern Rock in 2007. This was followed by huge
government bailouts for two major leading banks, Royal Bank of Scotland and
Lloyds TSB. In the aftermath of the crisis, Sir Hector warned the City to
"be frightened" as he pledged an era of more intrusive and direct
regulation.

During a
subsequent Parliamentary investigation MPs criticised the FSA for its handling
of regulation during the credit crunch and accused it of being "asleep at
the wheel".

Since then, a vast number of banking scandals
arising out of a total failure of regulation have come to light on his watch.

The scandals involving what is inappropriately
referred to as mis-selling (it should be called downright institutionalised fraud),
have arisen from a banking culture that believes it is still fair game to stuff
their clients with unsuitable financial products, and mislead them as to their
suitability for their needs!

The FSA were only too well aware that this
fraud was widespread in the market but they allowed it to continue. Then there
has been the long list of scandals involving wholesale money laundering and
sanctions busting carried out by British banks, which again were allowed to
carry on under Sants' oversight. Did no-one come to him and say 'Hector, we have
a problem', apparently not?

Sir Hector said his award was a "testament
to the hard work of everyone at the FSA during the crisis, their willingness to
learn lessons and to bring about the changes that were necessary".

Well, that's alright then! I don't know what
lessons have been learned or what changes have been brought about which Sants
seems to be so pleased over. All I know is that whatever the scandal, and no
matter how big the crime, or egregious
the dishonesty, very, very, few criminals routinely get prosecuted by the FSA
for the crimes which are within their limits of responsibilities.

Sir Hector began his City career as a
stockbroker at Phillips and Drew, later taking senior positions at the
investment banks UBS and Credit Suisse.

While at the FSA, Sir Hector personally warned
the then chairman of Barclays, Marcus Agius, that Bob Diamond might not be a
suitable choice to become the bank's chief executive in 2010.

He also conveyed the FSA's worries about the
bank's culture, including the attitudes of its most senior staff to
risk-taking, tax laws and banking regulations.

And what notice did Barclays and their capo di
tutti cappi, Roberto Diamante, take of those warnings.

Nada, rien, nix, nil, nul, fucking nothing! That's
how much they feared Hector, despite his little warnings about banks being
'afraid' of the FSA!

Earlier this year, the FSA fined Barclays
£59.5m for its part in the Libor rate-rigging scandal, after which Mr Diamond
left the bank, but it was the Governor of the Bank of England and the Chairman
of the FSA who provided the 'encouragement' for Diamond to go!

Sants had planned to leave his role in February
2010, but was convinced by Chancellor George Osborne to stay on to see through
the coalition's break-up of the FSA. The real probability is that Osborne
couldn't find any other city figure who wanted to have his career blemished by
all the egg on the face that would accompany the winding down of the FSA,
particularly as it is only in recent months that the real truth about the
levels of extreme organised criminality in banking have started to become
public. No doubt the offer of a knighthood as a cost of seeing through the
changes might have sweetened the pill.

It was earlier thought that Hector might become
a deputy governor of the Bank of England and head the Prudential Regulation
Authority (PRA) - one of two new regulatory bodies that will replace the FSA as
part of an overhaul in the wake of the financial crisis. Events have turned out
rather differently.

Hector unexpectedly resigned earlier this year
and has courted more controversy, by joining scandal-hit Barclays from January
2013 to improve the bank's reputation with governments and regulators internationally,
where he will become the bank's first point of contact for them.

Barclays,
which had its reputation battered following this summer's LIBOR rate-rigging
revelations, needs to do something very urgently to distance itself from its
reputation as a mafia family. Maybe they think that the man who didn't know
what they were up to when he was head of the regulator which oversaw them is
just the man for the job.

He is believed to be in line for a £3m pay
package.

He will be directly responsible for making sure
all its 140,000 staff obey the law in the more than 50 countries where it
operates and that it is held in higher esteem by governments and regulators in
future!

Well, this should be interesting to watch. He
couldn't achieve that outcome when he had responsibility for supervising their
activities while head of the FSA, so what odds he will achieve it now? Still,
£3 million will help the old life-style a bit! Nothing like getting a taste of
modern-day banking rewards to make a chap feel at home from day 1!

The award of this honour is as farcical in its
provision as was the award of a knighthood to Fred 'the Shred' Goodwin at RBS.

Both awards demonstrate a degree of contempt
for the issuance of awards in general, and for the specific reasons for
granting the particular honour.

In Hector's case, it may well be that he is
getting his pay-off for seeing through the winding down of the FSA, although
some may feel that he had a duty to do that in any event as many of its particular
failings occurred under his oversight.

I sense it is even more cynical than that
however.

My feeling is that by disposing of this award
on Hector, the Government can be observed to be honouring the FSA in general.
That is how Hector himself refers to its receipt!

By so doing, the Government is letting it be
known that the FSA should not be perceived as the total failure it has become,
worse even than the long gone but unlamented Company's Investigation Branch of
the DTI!

Cameron and Osborne don't want writers and
commentators queuing up to hammer the FSA, declaring it to be a wholesale
failure, because that will not reflect well on them. No, better to grant its
former CEO a knighthood, and make it look as if everything in the garden was
rosy.

The fact that you, me, the City, the Americans
and anyone else who has the remotest interest in these issues knows it wasn't,
is neither here nor there.

I am deeply angered at this cynical award,
because it makes a complete mockery of those people who have received awards
and who may perhaps feel that they have done something to achieve them,
something of value. Sants is being rewarded for failure, but in the strange
la-la land of the Square Mile, it was ever thus!

*Thanks go to Show of Hands for their wonderful
song 'Arrogance, Ignorance and Greed'.

Friday, December 28, 2012

The City of London,
and those who serve its commercial interests, is a self-fulfilling prophecy.
You may only be admitted to membership if you are willing to sign up to all its
mores, its practices, and its standards, with absolutely no caveat.

You must not have
been seen to be critical of its methods or the ways by which it enriches
itself, you must not have any doubts
about the complete integrity of its conduct of business, and you must openly
demonstrate your support for its ambitions, its traditions, and its culture.

Above all, you must
not speak critically of its activities, either within the system, but
especially not to outsiders. To do so is to guarantee your eviction to
financial outer darkness.

Another shibboleth
is that you do not speak critically about its regulators, to do so is to
guarantee that you will never be employed within the Temple of Mammon. A
strange decision, you would think, but no, the City has this exotic belief to
which it clings like a deranged limpet that the regulatory agencies are a
vindictive elite with super-human powers and long angry memories who will
remember any institution which has once criticised them, or employs anyone who
may have been critical of their actions, and then single them out for
particularly draconian treatment.

This means that a
compliance officer will never fight back whenever a regulator makes any demand,
no matter how unreasonable, the firm simply doesn't want any of its compliance
personnel to give the regulator any perceived excuse to single the house out
for special treatment. It doesn't really matter as both sides know that the
regulatory , in most cases, is essentially a box-ticking exercise, and little
more.

So, the entire financial
sector operates on a belief mechanism that does not allow for any, even
remotely, critical observation of itself, its members or its regulators. Thus
everyone operates in an intellectually-critical vacuum, where no one says 'That is not a
proper way to behave', or 'I really do not think this the right thing to do',
or especially, 'what you propose is unlawful', so nobody is made to feel that
what is going on is anything other than a perfectly normal set of actions,
designed to benefit those inside the magic circle.

City practitioners
instinctively know these things, they don't have to be taught, because they
learn it from the very earliest days in their jobs. When a young trainee banker/trader/broker/analyst,
whatever, joined their firm in the past, they would already have been through a
selection process, during which they would have probably been introduced to the
team with whom they would be working. In many cases, they would have spent some
time with their new counterparts, perhaps they would have been wined and dined
by them or spent time with them in a social atmosphere. They would quickly have
become aware of the amount of disposable money their new colleagues seemed to
possess, and they would remark how they were dressed. They would quickly come
to enjoy the freewheeling, hectic routine of the office, the desk, the team
building exercises, and the tales of hedonism and excess, and particularly in
those cases where they had received a hefty signing-on bonus.

They would be
introduced to others who had become senior players at an early age, who were
earning huge-figure salaries and even bigger bonuses, and they would have
quickly learned that the true route to promotion and success was determined
exclusively on how much money was earned and brought to the employing firm in
profits.

Like Jesus being
taken up by the devil into the high place and tempted, the young trainee is
shown all the rewards for keeping the faith, and quickly comes to realise that
the return on the investment being made in them is complete and utter
unquestioning obedience to the new set of norms which have replaced those with
which they were brought up, and absolute silence as to the means by which those
new norms are defined and interpreted !

So what happens if
someone from within the financial milieu does step out of line, and behave in a
way that is not proscribed by the unwritten rules of conduct which the
financial sector expects to see applied.

Martin Woods was a
London-based compliance officer with the American bank Wachovia (now owned by
Wells Fargo). He alerted the authorities to what he suspected was the massive
laundering of drug money through the bank. Woods claims that he was pushed out
of the bank due to his actions. Wachovia subsequently paid a $160
million settlement for anti-money laundering failures in relation to Mexican
drug smuggling.

Martin Woods had
simply done the job that was required of him, and being a former British police
officer, he was very aware of his legal responsibilities under the money
laundering laws and regulations. Having made the disclosures he was by law
required to make, he was sacked from his job.

Subsequently, Martin
wrote an opinion piece for the Financial Times on 23rd August 2012. In it he
said;

"...Three years
on, I have not found the fear Mr Sants was hoping to instil (in the City). This
failure has led to further instances of bad banking and scandal. There are some
who neither fear nor respect the FSA as a credible regulatory authority. In
2011 the FSA imposed fines totalling £66m. So far in 2012, US authorities have
fined British banks about $700m. Does the sum of £66m present a credible
deterrent..?"

Fairly bland stuff
you might have thought!

This year in March the FSA fined Coutts
Bank £8.75m and ordered it to significantly step up its efforts to prevent
drugs barons, deposed dictators, organised criminals and terrorists from using
the bank as a conduit and purifier for their ‘dirty’ money. The bank was
censured for failing to check whether the wealth of “politically exposed
persons”, code for toppled Arab dictators and their families, was legitimate.

Describing Coutts’
failings as “significant, widespread and unacceptable,” the FSA ordered it to
strengthen its anti-money laundering controls and ensure money-laundering
reporting officers (MLROs) had sufficient “robustness” to challenge its private
bankers, a difficult ask when banks and bankers have much to gain from turning
a blind eye to ‘dirty’ money, earning fees of 5% to 25% for sums laundered.

Coutts Bank, an RBS subsidiary, had appointed Martin
Woods as an anti-money laundering (AML) expert a year ago. Woods was
interviewed by Martin Bush, a senior consultant who was running the bank’s ‘AML
change programme’. During the interview Bush told Woods he was hired. In an
internal RBS email reported by Ian Fraser in the Sunday Herald, the appointment
was approved and Woods signed a contract on July 18 2011 at a day rate of £650,
which equates to a salary of £130,000 a year.

The Royal Bank of
Scotland then almost immediately reneged the job offer to this leading
anti-money-laundering expert on discovering he had blown the whistle on drugs
money-laundering by a former employer.

In a separate
internal RBS email dated July 27, 2011, sent by Bush to Coutts’ compliance
director Peter Nelling, reveals that the bank chose to renege on its commitment
because it “we had become aware of an incident at Wachovia, one of Martin
Woods’s previous employers, and that Coutts was keen to avoid any risk of
reputational damage that might relate to the incident”. Coutts, the bank, which
numbers the Queen amongst its clientele, told Woods the job offer was being
withdrawn the previous day, July 26.

In an employment
tribunal to be heard in London later this year, Martin Woods will sue Coutts
private banking arm for discrimination and detrimental treatment of a
whistleblower. Woods' claim is simple. He argues that Coutts tore up a signed
contract of employment on discovering that he had exposed a $378 billion money
laundering scandal at former US employers Wachovia Bank.

“I am suing Coutts
for discrimination against and detrimental treatment of a whistleblower under
the Public Interest Disclosure Act and the Employment Act,” said Woods. “If I
was there, I would have seen my role as being to robustly challenge their
private bankers to explain their relationships with certain customers and what
these customers were doing with Coutts, as set out in the FSA’s final notice.”

Coutts has argued
that, since it was not a party to the contract, which it says was the work of
an external recruitment firm, Woods was never technically an employee and
therefore is not eligible for protection under the Public Interest Disclosure
Act and the Employment Act. The bank has also blamed its withdrawal of the job
offer on the fact Woods had been “vocal” in his criticism of banks and the FSA
in December 2010. Coutts is also arguing that Woods’ claim is out of time.

Woods, argues that a
number of untrue and misleading statements from Coutts, which contradict what
bank officials said in internal emails, had delayed his ability to issue
proceedings.

Throughout this
all-too-predictable-episode, you may have noted one of the reasons given by
Coutts for their treatment of this brave and honorable man, "...the bank
has also blamed its withdrawal of the job offer on the fact Woods had been
“vocal” in his criticism of banks and the FSA in December 2010..."

Now, how does that
work, I wonder? Here they are seeking to apply their own twisted set of
standards as a legitimate means of withdrawing a job offer, because Martin
Woods had publicly stated his criticism of banks and the FSA! You would have to
be a complete delusional imbecile not to have criticisms of banks and the FSA
after what has gone on in the last few years. It would be an indictment not to have criticised
the banks, because not to have done puts
you squarely in the camp of complicit organised criminals who make up the criminogenic
structure of the financial sector . The FSA has been a significant failure in
the way it has regulated the financial sector.

The real truth is
that to be a successful money-laundering reporting officer (MLRO) these days,
you have to know which questions not to ask. Banks don’t want MLROs with any
skills, experience, or the independent knowledge to be able to stand up to the
commercial people and say, ‘you can’t do that’, because that would be to admit
someone to the club who was challenging the status quo, and that would never
do.

I first learned
about the concerns that the City has about being criticised when I used to
write a column for a financial newspaper. It was called 'Bosworth Files' and I
used it to identify failings in compliance models and suggest other ways of
making the compliance officer's job more effective.

Certain financial
sector members contacted the editor and hinted that unless my column was pulled
in its entirety, they would recommend to their friends to withdraw their advertising
from the paper. My column was duly eradicated. Since those days, such an event
has happened to me a few times, and I suspect it is about to happen to me again
in a column I was writing for an Australian anti=money laundering journal.

The best example
occurred when I was editing an academic journal called the Journal of
Regulation and Compliance. I had written a coruscating editorial in which I had
pointed the finger at a series of financial practitioners who were behaving in
various criminal ways, and I had used the editorial to identify a series of
criminal offences which were being routinely ignored by the then regulatory
authority, the SIB. You will note how little has changed over the years!

I then received a letter
from a very senior executive in some eminent Scottish investment institution
who wrote to me complaining bitterly about the content of my editorial, saying
that he could not believe that an 'organ' of our stature and profile would
stoop to such irreverent commentary, and demanding that I bring his letter and
its contents to the attention of my publishers. In the usual financial sector
manner he clearly believed that he and his institution were extremely important
and powerful and that the publishers of my journal would be heavily influenced
by their complaint and would use it to either discipline me or indeed, remove
me altogether.

I replied to his
pompous missive by saying that I was delighted to receive it, but that I did
not believe in conducting discussions of such obvious importance in private,
and that I felt his complaint was of such importance, that I would publish it
in the next edition of the Journal, together with my reply, so that my
publishers would able to see the depth of his concerns.

I then invited him
to write an article in which I said that he could set out in great graphic
detail his concerns about my editorial, and allow him Journal space to tell me
why I was wrong, and to set out his objections to my observations in writing
and in public.

Needless to say, I
never heard another word from the pompous arsehole!

Martin Woods' case
is due for hearing shortly. I am certain that like me, you will want to wish
him well!

Monday, December 24, 2012

I thought that I might post something to remind ourselves what Christmas is really meant to represent. We have all next year to bash the banksters. I wrote this some years ago, but the message is still valid, I hope. Have a very happy and blessed Christmas and a great new year.

Joseph’s story

She’s sleeping now.

I managed to clean her up as much as I could,

And the women from the inn took away the birth straw.

They were far too busy after that to be bothered with her anymore.

The rooms were all full and the guests were shouting for their dinners and liquor and calling for service.

It was kind of the woman to give us some old birth cloths to wrap him in,

Said they were old, but clean, even if they had been used before.

She didn’t seem to mind.

The boy has blue eyes.

Seems like a healthy lad, at least as far as I can tell.

That’ll be a blessing anyway, it’s hard enough feeding her and me just now.

Business has really fallen off since the Romans started squeezing the last coins from our pockets to pay for all their foreign wars.

He’ll have to get used to hard work if he wants to keep his place by the fire and share what little food there is.

As I say, he looks sound enough, but what do I, an old man, know of these things, I never had a son before.

I wonder, were his father’s eyes that piercing blue.

I’ve known her since she was very young.

Her father recently asked me to marry her as I was still alone, even after all these years.

He made me a good offer because he already had three other girls and she was, well, she was the least comely,

And he simply couldn’t afford marriage portions for all of them,

That was how he put it.

When I agreed, he gave me a longer lease on the workshop and said he wouldn’t press too hard for rent,

If I wasn’t doing so well that quarter

Nice of him to do that, I thought

The only condition he wanted was to announce our engagement soon

Because she was expecting a child and he did not know who the father was.

Neither did she apparently, except that it came from heaven,

Or so she said, some daft story about an angel,

And her being chosen for a special task.

Don’t suppose it makes a lot of difference anyway.

I'd been having some really odd dreams about this time and I found that I didn’t mind about not being the father,

Although it took a bit of getting used to at first.

The men in the wine shop said I was a fool,

Said I could have held out for a lot more

Called her father a skinflint, said I was doing him a real favour

While the women talked about her in corners,

Making pointed references to certain dates in the calendar

And the arrival of a new cohort of Roman soldiers in the town.

But she simply put her hand in mine

And said she would be a good wife to me

And after that,

I found that it really didn’t matter at all.

She’s a strong little thing.

I’ll say that for her, and when we were told we had to make this winter journey to get registered for the new taxes,

She didn’t make a fuss, but just gathered her few bits and pieces

And went to see to the donkey.

She put what we needed in a bag and handed me the reins

And said we should start soon, as it looked as if the weather would be closing in.

She never once questioned the reason for having to go so far,

It kind of seemed like she was almost expecting it.

I thought we would make it all the way.

Except she couldn’t go on any longer as she was far too tired and her feet were bleeding.

And when her waters broke and the baby started coming, she simply asked me to find her somewhere to lie down,

And she said she would be alright if I didn’t stray too far away.

This inn was just down the road,

But the landlord said he was full up with paying guests

Unless of course I had enough money to pay for his best room

And by the look of our condition, he said he somehow doubted it!

I told him we were broke.

He just stood there with his huge fists on his hips and laughed

And shook his head and told me to get lost and not to waste his time.

His wife understood though, and said he should be ashamed and that we could use the stable

As long as we didn’t mind sharing with the animals.

She came with her mother and old cloths and hot water later

But as I said, they couldn’t stay long

She asked us not to think too hardly of her husband,

Said that he was a good man really.

She didn’t want me then.

Told me to go away and not to come back until it was finished.

I began to argue but she was insistent,

Said that this was something she had to do alone and that she would receive all the help she needed, but she didn’t say from where.

Just told me not to be too far away.

She was right of course, what was I really going to be able to do to help, what experience do I have of these things

She only screamed out once, a man’s name I think,

But I didn’t catch it.

Then, later, the strangers started to arrive.

You would have thought that they would had more consideration.

I mean it’s bad enough trying to manage a new birth,

On your own, in a cowshed, without constant interruptions.

First a crowd of smelly sheepherders, the poorest kind who live out on the hills all year round, not much better than brigands and thieves,

Men with rough hands and even rougher speech, and dressed in fleeces which stank

They all insisted on crowding in to see the child

And wouldn’t take no for an answer.

The landlord tried,

He wouldn’t let them in at first.

Said he ran a classy house and said they had no money to spend

and that they would only frighten his paying guests.

He took some real persuading, but they were very persistent.

Their leader kept going on about angels telling them about the baby and how they had to come and witness his birth.

It’s all nonsense of course, they’d probably all been drinking,

But they did seem genuinely pleased to see the boy

She didn’t say anything, she just smiled.

Just as she was about to go to sleep the professors turned up.

Said they had come a long way and pointed at a star they claimed to have followed, but among all the others blazing away on that freezing cold night, I couldn’t make it out.

They at least brought some presents, but these educated types have no common sense at all.

What is a simple carpenter going to do with myrrh? She can probably use the frankincense to air the clothes, but God knows what I’ll do with the gold.

I’ll have to hide it from the taxman, and hope no-one gets to hear of it.

They talked a lot of blather most of the time, or so I thought,

But isn’t that just like academics all over.

They did tell me not to go home to Galilee just now

Seems it isn’t safe because the King has been asking a lot of questions about some other king being born.

That rules us out of course

But I think I‘Il take their advice anyway, it doesn’t pay to pick quarrels with kings, priests or politicians.

It’s a lesson to teach the boy when he’s older,

No point in looking for trouble if you don’t have to.

I’ll have my hands full just teaching him the trade

Seems strange now looking at his tiny hands to think how will they ever get used to managing the skills of the carpenter.

But he looks strong, he’ll learn, and when he’s finished his apprenticeship, I’ll take him into the business with me.

That’ll be good, the two of us working together.

And when he has learned enough to be about his father’s business,

We should be able to bring in enough to rent the olive grove behind the workshop,

And maybe buy some goats for his mother.

I’ll teach him all my skills so he won’t hurt himself.

Just making a simple joint to hold two pieces of wood together is a complex operation,

If they are going to last and draw from each other’s strengths.

Using hammers and saws needs time to learn,

The slightest slip when working in wood can cause great pain,

I couldn’t bear to think of the flesh of his hands being torn by nails.

No doubt you’ll say its an occupational hazard for a carpenter

But he seems different somehow, I can’t really explain it.

Maybe I’m getting soft in my old age.

We’ll leave in a few days

When she’s stronger and there’s more colour in her cheeks and she can feed him properly.

I’ll thank the innkeeper of course, but frankly, he’s been acting a bit oddly since the professors left and keeps touching his forehead and calling me sir!

We’ll have to register another time, when it gets a bit easier.

We have to think of a name for him as well. I expect she’s already thought of that, but if she has, she hasn’t let me know.

About Me

Having spent my career dealing with financial crime, both as a Met detective and as a legal consultant, I now spend my time working with financial institutions advising them on the best way to provide compliance with the plethora of conflicting regulations and laws designed to prevent and forestall money laundering - whatever that might be! This blog aims to provide a venue for discussion on these and aligned issues, because most of these subjects are so surrounded by disinformation and downright intellectual dishonesty, an alternative mouthpiece is predicated. Please share your views with what is published here from time to time!